New Jersey Governor Phil Murphy appears to have rolled back expectations for how much marijuana will help ease the state’s financial pain.
Murphy’s $38.6 billion budget, which relies on a millionaire tax to bring in an extra $447 million, assumes that legalizing and taxing recreational marijuana would produce just $60 million of revenue during the first six months if sales begin on Jan. 1, half way through the fiscal year. That’s a far cry from the $300 million a year the Democrat estimated could be generated when he was running for election in 2017.
The shift illustrates the difficulty of forecasting how much states can reap by ending the long running prohibition on the drug, an idea that’s also under consideration in New York and Illinois. In Chicago, Mayor Rahm Emanuel has seen it as a way to help cover the city’s swelling bills to its employee pension funds.
But with the business long operating in the tax-free black market, legalization hasn’t proven a windfall for governments just yet, in part because some consumers are still buying underground. In California, the nation’s largest state, marijuana taxes are expected to generate $355 million during the current budget year, a tiny fraction of the government’s $139 billion budget.